If you are a freelancer or business owner, your income is erratic unlike a salaried person's fixed pay. Sometime you get a paycheque in the middle of the month and sometimes, the payment is delayed from the client side. There is no fixed amount that you can expect on the 1st of every month.

While self-employment makes you your own boss, it does comes with its own set of challenges. For instance, you do not enjoy the benefits offered by a regular job like insurance, steady pay, and severance package among others.

Hence, it is more essential to plan for finances in a way that minimizes your risks while covering future financial goals.

Build an emergency fund

In troubled financial times, maintaining a steady income and finding new clients can be a challenge. To uncover unexpected expenses and loss of income in the business, it is crucial to have an emergency fund. It will give you the much needed cushion to overcome tough times. Try building an emergency fund capable of covering at least 6 months of your household expenses.

Read More: How to build an Emergency Fund?

Term and Health Insurance

Term insurance will cover the household expenses of family in your absence. It become more important to take a turn insurance if you are the sole breadwinner in your house. Try taking a sum insured of at least 20-30 times of your annual income sufficient enough to cover your home loan and regular household expenses.

Health insurance will cover unexpected medical bills that otherwise could eat substantial part of your savings. Buy a good health cover as soon as possible to as their premiums get more expensive as you grow older.

Invest in quarterly SIPs

Freelancers and business owners tend to have volatile and sporadic income. You might not earn the same fixed amount every month. Hence, there is no surety of saving the same amount every month as well. In such circumstances, it is better to go with quarterly SIPs to invest in mutual funds to accumulate the earmarked amount easily for investment.

Read More: What is goal based financial planning and its importance

You can start investing with amount as low as Rs 500 per month and invest a lump sum amount as when you get the money.

Separate business and personal account

You should use separate account for your personal expenses and investments. The best strategy should be to transfer a particular amount as a salary to yourself from your business account. For instance, if you monthly expenses including investment is Rs 70,000 then you should transfer that amount in your personal account every month to keep business and personal finances separate.

Invest for retirement

Do not forget to earmark some part of your investment for retirement fund. Invest in market linked financial instruments like mutual funds to earn inflation beating returns for faster wealth creation. You can also invest in a PPF account to earn steady returns and create a retirement fund reliably.

Read More: Hate your regular job? Here is how to retire at 40

Careful planning of your finances will easily help you minimize your financial risks and meet your financial goals as well.